Bitcoin boom reflects investor appetite for risky assets

Key facts:

Falling interest rates and monetary policy are boosting bitcoin, according to the Fed.

For the Fed, a rise in interest would be a bearish factor for cryptocurrencies.

In the Monetary Policy Report, published last Friday, July 9 by the United States Federal Reserve (the Fed), the rise of bitcoin and cryptocurrencies is mentioned for the first time as a reflection of a greater appetite for risk on the part of The investors. After referring to the rise in house prices at a double-digit rate, “due to low interest rates and a changing dynamics of supply and demand,” the report refers to the rebound in cryptocurrency prices.

The Fed’s Monetary Policy Report is published twice a year, in February and July, and it is presented before both houses of the US Congress, along with a testimony from the Fed Chairman. The document contains discussions of “the conduct of monetary policy, economic development and prospects for the future,” says the regulator in the introduction.

Fed acknowledges bitcoin boom

In the last 12 months, according to CoinMarketCap, the market capitalization of cryptocurrencies has grown 424%. “The price boom of a variety of cryptocurrencies also partly reflects an increased appetite for risk,” the report states.

The Fed notes that while long-term Treasury yields have risen since mid-February, they “remain low by historical standards.” From there, the regulator argues that high asset prices, referring to cryptocurrencies, “partly reflect the continued low level of Treasury bond yields.”

The Fed later warns in the report that the prices of these assets “may be vulnerable to significant falls in case investors’ appetite for risk diminishes, interest rates rise, or the economic recovery stagnates.”

Yes OK this is the first time attention has been paid to cryptocurrency market dynamics in an official Fed document, At the end of last April, its president, Jerome Powell, had recognized in a press conference, reviewed by CriptoNoticias, that the US monetary policy could have favored the rise in the prices of bitcoin and other cryptocurrencies.

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